Current Development of Accounting Thoughts: A Comprehensive Report

This report provides an in-depth analysis of current developments in accounting, focusing on two primary areas: the accounting practices of Pioneer Ltd and the exposure draft related to IAS 37. The first part of the report examines the accounting policies of Pioneer Ltd, highlighting issues with asset valuation, adherence to accounting standards, and the application of stakeholder theory. The analysis includes a discussion of the auditor's concerns, the company's response to criticisms, and the implications for stakeholders. The second part of the report focuses on the exposure draft concerning IAS 37, specifically addressing onerous contracts. It explores the proposed amendments, the comments from various organizations such as BDO Network, CPA Australia, and the Canadian Accounting Standards Board, and the overall impact of these changes on accounting practices. The report concludes by summarizing the key findings and implications of these developments in accounting.

Running head: Current Development in Accounting Thoughts
Current Development in Accounting Thoughts
Name of the Student
Name of the University
Author Note

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Current Development of Accounting Thoughts
Table of Contents
Answer to Question 1.................................................................................................................2
Answer No 2:.............................................................................................................................5
Executive Summary...............................................................................................................5
Introduction............................................................................................................................5
Proposal..................................................................................................................................5
Comments to the proposal amendment..................................................................................6
Comment given CPA Australia..............................................................................................8
Comment of Canadian Accounting Standards Board..........................................................11
Comments of the Rio Tinto..................................................................................................14
Conclusion............................................................................................................................17
Reference..............................................................................................................................17

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Answer to Question 1
The accounting system which is been chosen by the Pioneer Ltd is been shown in this
article so that it can show the business accounting information. The article is been published
in 3rd April 2019 which is been shown in the financial review of the company. The company
was following wrong accounting treatment in regards of their business which is been shown
in this article, the company is been based in Australia (Pioneer Credit Limited 2019). It also
show about the auditor and other management review upon the controversial accounting
policy of the company which is been followed in the business.
The company is been based upon Australia and it carry its business operation in
Australia and New Zealand and the company deals in providing different financial services to
the individual of the respective country (Pioneer Credit Limited 2019). The company is one
of the best in its industry and so it has got a very good brand name in the company. The
company is not able to show the proper value of their asset and this article is based upon the
accounting policy. As per the article it can be seen that the company is not able to follow the
proper policy and principle in regards for the preparation of the financial statement as it does
not able to follow the accounting standard properly and it is also been seen that the company
is not able to follow the norms as per the conceptual framework which is been followed by all
the company in the country (Pioneer Credit Limited 2019). So it can be say that the company
is not able to follow the standard properly. The Accounting policy which is been laid in the
Generally Accepted Accounting Policy has said not to be follow the unorthodox accounting
process but it can be seen that the company have followed the same for the valuation of the
financial asset of the company. It can be seen that the company is not able to the accounting
as per the accounting standard and this was also be laid by the auditor of the company.

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The auditor of the company is also worried about the financial statement preparation
of the company as it is not been mention properly and also not as per accounting standard. It
can be said that the company have a conflict with the conceptual framework of the country as
the management have told that they will not able to change their accounting treatment which
is been followed by the company in the financial statement (Pioneer Credit Limited 2019).
The employee of the company is able to give the whistle blower and able to gave the more
information of the company. As per the accounting standard the company have to do change
in the valuation policies than only it will able to make the proper accounting statement of the
company.
The main business which the company is having is the purchase of the impaired book
and then all they are the also very effective in regards of the collection of the money from the
debtors. The price which is been agreed between the seller and the buyer so it is been valued
for the debt portfolios (Pioneer Credit Limited 2019). PWC was the auditor of the company
and as per the auditor they cannot able to get proper information about the company financial
statement so they are not able o judge whether the financial statement of the company is
showing fair value or not. So as per auditor as they were not able to get sufficient information
so they gave the company a qualified report. As per ASIC the company should value of their
asset upon amortised cost but they have valued the same upon the fair value of accounting so
it is been consider as wrong accounting treatment. As per the management communication
they are also not ready to change the policy also this make the accounting more problematic.
As per of the company accounting policy so this been consider as problem as a
auditor report also gave them qualified report so as a result it have to lose its market share
value in the stock exchange. As per the wrong accounting the company is losing all its
investors and also they are not able to hold their share price as it was losing rapidly. In last 12
months the company has lost 46% of share so it is a big problem for the company. It is the

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duty of the company to provide sufficient amount of the information in the financial
statement so that it will help the user to get more understandable information of the company
financial statement.
As per the case in the article it can be said that the stakeholder theory will most
appropriate for the situation as the stakeholder also consist of the worker and the employee of
the organization. If anyone is been affected by the decision of the company than there are
consider as stakeholder as per the stakeholder theory (Pioneer Credit Limited 2019). So it is
the duty of the company to consider this while taking important decision in the activities of
the business. Stakeholder should also be consider as main part of the organization as it should
not able to consider only the interest related to the stakeholders. It should treat all the groups
equally and should take their decision accordingly. As per the article it clearly shows that the
company is not able to give appropriate information and also not able to follow proper
accounting standard so it is a problem for all the stakeholder of the company. The company
management also not able to maintain their policy as per the framework so it should be taken
into consideration as per the stakeholder theory
The article show about the Pioneer ltd policies and how it is not able to show the same
so if the company is able to follow the entire accounting standard so it will able to make more
accurate financial statement and it will also able to show proper report as per the conceptual
framework policy of the accounting standard. The company have to suffer from penalty and
also it can go for the dissolution if the company is not able to change the valuation as per the
accounting standard and conceptual framework. The company should follow the stakeholder
theory and should able to consider the client also in the financial decision of the company.

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Answer No 2:
Executive Summary
The report show about the exposure draft which is related IAS 37. It show about the
changes which are came by IASB and also the review which are been given by different
company upon the change which are done by IASB.
Introduction
This part is been based upon the analysis of the exposure draft that is been issued in
the International Accounting Standard Board which is been consider as per the public for the
business reporting framework (AASB Standard 2014). The draft is been based upon the IAS
37 which is been related to the Provision, Contingent Liabilities and the Current Asset. It
shows about the details in regard of the Onerous Contracts – Cost of Fulfilling a contract
(Buchanan 2019, 1 April). It show the for and against of the recommendations that is been
shown in the exposure draft. It also shows about the different theories which are there in the
draft.
Proposal
The contract which show the unavoidable cost which is been there in the exceed of
the economic benefit is been treated as Onerous Contract. As per the IAS 37 it also discuss
about the contract portrays unavoidable cost as it is the least of the payment which is been
made on the penalty which have arise for the non-performance of the contract and cost spend
upon the performance of the contract (Buchanan 2019, 1 April). It is not able to show the
valuation of the cost for the fulfilment of the contract in the business. The main point which
is shown in the article is about the cost of the contract which are related to the construction.
The issue which can be shown in the IAS 37 is the identification of the costs. It can be said
that the company use different cost treatment and it also differ from one company to another

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so as per the understanding the user it should provide proper clarification should be given by
the company.
It should be said they there should be changes in the onerous contract so that it can
able to give proper framework which is been followed by the companies in different country
so it should be changed (Deegan 2014). The changes which are been done the committee
help to give details of the definition of the onerous contract and also how the company can
able to measure the contract so that it can able to fulfil the requirement of the contract of the
business.
Comments to the proposal amendment
Comment of BPO Network
The changes which are been suggested by the IASB, is not able to satisfy the
expectation of the BDO network so it made the comment upon it. The reason of the same is
been shown below:
o The changes are not appropriate as it should take into consideration all the cost which
are been spend by the company as there are directly related to the coast estimation of
the contract.
o The non-incremental cost which is to be considering in future are included as onerous
contract. So the changes which are been done in IASB is not able to take the operating
losses which are done by the company in future so it is not a proper change which is
done by IASB. The changes are not appropriate as it is not real about the provision
which is related to cost of the contract.
o The amendments which are been made is not able to fulfil the definition of the
onerous contract. As it show about the unavoidable cost as it should not be able to
record the same.

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Comment given CPA Australia
It can be seen that it has been supported the same as when the company is able assess
the contract as onerous contract in regards that it able to fulfil the cost which is related to the

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Current Development of Accounting Thoughts
contract as per the incremental cost that is should be consider initially for the purpose of the
analysing of the same. The reason for the same is been shown below:
o It able to satisfy the cost as it shows about the onerous contract as it is been directly
related to the contract and not only the incremental contract of the same. It show that
due to this reason it will able to give an proper accounting and able to give proper
report of the same.
o It is not able to agreed about the changes which are there in the paragraph 68B as the
charges of the general and administrative cost are not able to show whether they are
as it cannot able to determine the cost related or not.

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Comment of Canadian Accounting Standards Board
As per the Canadian Accounting Standards Board it state that the paragraph 68 which
is been related about the Provision, Contingent Asset and Contingent Liability that it
should show all the cost which are been directly related to the contract. The points are
been shown below:
o The changes which are there in the Paragraph 68 of IAS 37 should clearly details
about the about the cost which is to be included in the contract. As the board have
to check the contract which is been giving some economic benefit and should
represent the same.

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o The company management should show all the economic benefit which it arise
from the contract so that the better presentation of the same can be done by the
company. As IASB should clearly mention whether is should be included or not
about the contract.

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Comments of the Rio Tinto
The management of the company of Rio Tinto is not able to be satisfied with the
changes so the reason behind the same is been given below:
o As the changes are been made so it will directly affect the disclosure which are been
given by the company as it is not a logical approach of the amendment. It have two
more changes which is not there in the IASB amendment
o It is also not agreed with the changes which have arise in the paragraph 68A- 68B of
the draft.

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Conclusion
The conclusion which can be make is it show about the exposure draft which is been
related to the IAS 37. It shows different company review and how they are agreed or
disagree with the proposal of the changes came by IASB. The one point which was there
in all the same that the IASB should give more clarification in regards of the economic
benefit which is arise in the contract.

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Reference
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